engage in construction without contractors. Municipalities should be forbidden to attempt to make money, and their borrowing power ought to be restricted.1

In the United States the debt limit for municipalities is: 10 per cent. of the taxable value in New York, 5 per cent. in many of the western states, and 2 per cent. in others.

This year (1913) the German cities are being much hampered for lack of credit. A loan sought by the city of Carlsruhe has had to be indefinitely postponed The smaller and medium sized municipalities, in the absence of funds, have been obliged to postpone necessary work.

'Constitutional Amendments to be added to the Declaration of Rights.

CHAPTER XVIII

FICTITIOUS PROFITS

Railway Charges.-Local Taxes on Prussian and English Railways.-The Victorian State Coal Mine and the Government Railways.-New Zealand.-Profits of the National Printing Office.-The Insurance Monopoly.

Private enterprises are subject to certain charges from which state undertakings are exempt. These exemptions create an illusion of profit. Local taxes paid by the government railroads in Prussia amount to £750,000 ($3,652,500), while similar taxes, paid by the railways of the United Kingdom, having nearly the same length of line, reach £5,000,000 ($24,350,000). If both were taxed at the same rate the profit on the government railroads in Prussia would be proportionally reduced.1

Further, the profits of one state undertaking are frequently obtained only at the expense of another. For example, the Victorian state coal mine, in Australia, is called a success; but the director of railroads, Mr. Fitzpatrick, complains of losing 45,000,000 francs ($8,550,000) through being forced to use government coal.2

At the end of 1912 it was announced that the New 'Edwin A. Pratt, Railways and Nationalization, page 3. 'For New Zealand see Book 2, Chapter VII.

South Wales government was prepared to nationalize the iron industry, but with the proviso that the Federal government must stand ready to order the material for the new railroads from its mills. "Peter is being robbed to pay Paul. But such are the methods of presenting the accounts that the public does not perceive this fact," says Liberty and Progress, Melbourne, May 25, 1911.

The National Printing Office of France undertakes to do outside work for editors; at the same time it has a monopoly of the government printing. It farms out its work to private printers, and it adds a charge of its own to the original cost when the work is delivered to the departments, which have no choice but to have their printing done by government printers. In this connection the inspector of the finances, M. Bizot, has pointed out the following facts:

"The National Printing Office furnishes the forms for telegrams. It has contracted with a private company to manufacture and deliver these forms to the aforesaid printing office, cut, folded, perforated, gummed, and turned at a cost of 67 centimes per 1,000 forms in pads of 100, and 50 centimes per 1,000 forms when delivered as loose sheets. Up to 1911 the National Printing Office invoiced these supplies to the postoffice at a cost of 2 fr. and I fr. 62, respectively, instead of 67 and 50 centimes. In 1910 this addition of more than 200 per cent. represented a profit to the National Printing Office of 82,000 francs."

And who was paying this profit to the National Printing Office? Why, the Postoffice department, or,

in other words, the government, by submitting to an overcharge of 82,000 francs.

The law of April 4, 1912, has ordered that the insurance monopoly in Italy shall be exempt from postal charges, and that its profits shall not be subject to the income tax.

These exemptions will be accounted on the credit side of the insurance monopoly. They ought to be deducted from the government resources.

CHAPTER XIX

FISCAL MONOPOLIES

1. Tobacco Monopoly in France.-Treasury Profits.-Losses to Agriculture, Industry and Commerce.-Use of National vs. Maryland Tobacco.-Opposition of the Consumer. The Advantage.-Delusions Regarding Regulation.

2. The Match Monopoly in France.-No Amortization.— Bookkeeping Artifices.

3. Fiscal Profits.

1. It is customary to speak of the results of the tobacco monopoly in France, in force since 1811, as marvelous.

The income appears truly enormous. In 1815 it was 32,123,000 francs; in 1830, 46,782,000 francs; in 1850, 88,915,000 francs; in 1869, 197,210,000 francs; in 1890, 305,918,000 francs; in 1900, 338,872,000 francs; in 1910, 407,330,000 francs.

Without doubt this is a dazzling result from the fiscal point of view, and it also proves that the number of Frenchmen who use tobacco has increased more rapidly than the population.

But there are other ways for a government to make money out of tobacco than by monopolizing the sale of it. In 1908-1909 the United Kingdom realized £13,328,000 upon tobacco, that is to say, 333,450,000 francs, or only 74,000,000 francs ($14,060,000) less than our monopoly has yielded us.